2030: A Driverless Odyssey

This article was written by Benjamin Bosis, Brown ’20. It is one of two Intercollegiate Finance Journal (IFJ) articles co-published this fall under a new partnership between the DBJ and the IFJ. To find out more about the IFJ and the partnership, please click on the author profile below.

The Transport Revolution is Coming

When Russia successfully launched the first satellite, Sputnik, into space, the whole world suddenly became invested in the progress of completely new technologies – and Americans had some serious ground to regain. John F. Kennedy knew that setting a goal would be half the battle, so he urged congress that “This nation should commit itself to achieving the goal, before the decade is out, of landing a man on the moon.” It was only with the drive to achieve that aim that America did just that.

Technology has long been a means to power, but in today’s world we often see such battles between corporate entities rather than political ones. According to Elon Musk and other business leaders, the future lies in self-driving cars, and, like JFK dictating the mission to the moon, Musk is now conveying his vision of automated driving to the American people. Already, many of the biggest companies in the U.S. have broken into a full-on sprint to be on the right side of the coming transportation revolution.

A Battle Between Giants

Google, General Motors, Uber, Mercedes-Benz, Tesla, and Lyft have made huge strides in automated vehicle (AV) development. Even Apple, who leads America’s technology sales by a whopping $200 billion a year, is reportedly planning to get in on the corporate rush. These important players come from one of two completely different perspectives and corporate incentives. The tech giants who started the movement towards unmanned vehicles are secure in other products, but see autonomous vehicles as a new and potentially huge source of income. The auto giants, on the other hand, have an almost existential dependence on cars, and face much higher stakes in keeping their brands relevant.

Despite their decidedly distinct backgrounds, members of each side have begun to choose partners across the aisle, sharing their knowledge in an attempt to get ahead. GM recently invested $500 million in ride-sharing service Lyft, and announced plans to equip an autonomous Lyft fleet with GM cars. The same partnership exists between Volvo and Uber, which use each other’s technology exclusively in their pursuits; whereas Google and Daimler, focusing on more limited aspects of the AV market, remain independent. Though most thoughts on Apple’s efforts are largely speculative, they would most likely also avoid any significant partnerships in order to control their long time vision, which at this point remains unclear.

Your Mission, Should You Choose to Accept it

All of the competitors agree that automation will shape the next era of transport, but opinions differ on how driverless cars should be implemented in the new age. Uber and Lyft envision the disappearance of car ownership entirely. In particular, Lyft plans to market each of its products as part of a larger network of vehicles that, instead of belonging to any one individual, operate 24/7 to carry customer after customer from point A to B. Transportation would become an exclusively service phenomenon, eliminating the need for anyone to actually own a car. Perfectly suited to urban environments, the plan for driverless cities could lead to larger sidewalks and an often-fantasized-about end to traffic jams. The interconnected fleet would vastly decrease the overall number of cars, which would in turn decrease pollution and make almost all parking lots obsolete.

Despite all the excitement for AVs in the tech world, Tesla founder Elon Musk is betting that Americans won’t give up the freedom of car ownership so easily. As the first company to actually place semi-driverless technologies in the hands of individual consumers, Tesla has demonstrated a commitment to autonomy not only for the car-driving-software, but for the car owner as well. Ultimately, the vision that will triumph is the one most adaptable to American life. Individually owned cars could be more suited to America’s huge expanses; as cell providers have shown, ‘nationwide coverage’ often leaves out many people in rural communities. And for most, having a car means not only being able to go wherever you want, whenever you want, but more importantly, knowing that no one can stop you. That quintessential ‘American’ quality may give Tesla’s plan for the future a bit of an edge.

Anxiety and Fear — Obstacles to Adoption

Legislators across the country have reacted very differently to the prospect of self-driving cars their public roads. California, usually the center for this kind of tech development, has driven some companies’ efforts elsewhere by considering significant regulations. Their potential laws would require all autonomous vehicles to have brakes, accelerators, and a steering wheel as cautionary measures inside the car, which would also necessitate a human operator in all test vehicles. The federal government, clearly hopeful for what the industry could do for the American manufacturing economy, has remained extremely lenient and supportive, necessitating only minimal safety precautions and reserving the right to require reports of all tech failures from any company.

Consumer enthusiasm, on the other hand, is another animal entirely. Many Americans have safety concerns about vehicle automation. Robots may not make mistakes, but programmers can, and the idea of having no recourse whatsoever in the case of a tech malfunction is not something to be taken lightly. Investors are particularly wary, as seen when Tesla’s stock dropped 3.2 percent only hours after their first fatal crash was reported. The reputations of companies hoping to put fully driverless cars on the road are proving paramount to their ability to do so.

Pittsburgh: A Case Study for Acceptance

In the face of growing hesitance, Elon Musk has insisted that it would be “morally reprehensible to delay release simply for fear of bad press or some mercantile calculation of legal liability.” While some seem to agree with his logic, that may not have been a good thing for Tesla. Across the country in Pittsburgh, Uber in particular has taken advantage of commercial testing allowances. Pennsylvania lawmakers, who clearly have more to gain than those in a state already home to some of the biggest companies in the world, have made no signals toward any major regulation so far. This leniency is largely a continuation of America’s laissez-faire industrial tradition. Not only is the ability to test in Pittsburgh catapulting Uber’s project forward, but the jobs and attention that came with Uber are helping to rejuvenate the long industrial legacy of the city.

Through steel, Pittsburgh became of the biggest economic powerhouses in the United States, and helped to lift the U.S. to the wealthiest nation in the world; but since leaving the industrial frontier it has fallen into relative obscurity. Now Uber’s entrance, catalyzed by the harsher regulating in California, is giving many of the students at Carnegie Mellon University a reason to stay. Their high volume of robotics talent will prove to be key to both Uber and Pittsburgh as they blaze a trail in the automation industry; for Uber, it has already meant taking the lead in the development race. That lead may continue to grow if other companies cannot find testing grounds of their own.

They’ll Get Here When They Get Here

Nevertheless, in all the excitement of the current flurry of AV activity, companies have declared decidedly optimistic timelines – typically ranging from 3 to 6 years – for their progress toward commercial production. Tech analysts at McKinsey, however, have taken stock of expert opinions and constructed a more realistic one.

The initial process leading up to product release may finish as early as 2019, as companies predict. Most experts believe, however, that there will be a much slower adoption of the cars lasting until 2030, while safety data accumulates and customers uncertainty decreases. Any state of 100 percent implementation – such as an eventual outlawing of human drivers – would not likely come before 2050. So for those of you hoping to own a completely autonomous car, that hands-free commute might not be so far off; Lyft CEO John Zimmer’s vision of the intelligent, interconnected, super-efficient fleet is a far less likely eventuality. But whether they’re Teslas, Volvos, or anything else, self-driving cars are coming; and a brighter, cleaner future is coming along with them.

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The Intercollegiate Finance Journal (IFJ) is an economic, finance, and political journal based in Brown University at Providence, Rhode Island, dedicated to making content that is fresh and fun.
The DBJ established a partnership with the IFJ in fall 2016 to further discussion of business and the world. Under this partnership, each journal will co-publish articles from the other journal.